By Morf Morford
Tacoma Daily Index
Millennials, those turning ages 26 to 41 this year, (born between 1981 and 1996) have become what could be considered a vast and accidental social and economic experiment.
Born in the 1980s and ’90s, with the promise and dread of a new millennium, with a cryptic “baptism” of fears and uncertainties of Y2K, and then thrown into the Great Recession.
From there, they became saddled with record student-loan debt and soaring living costs only to stare down their second recession before the age of 40.
Now, as they enter a life stage filled with big spending, like home buying, even though they may make far more than most Boomers could have imagined, their financial futures are undermined by a force few if any of them would have ever understood or believed – inflation.
The financial crisis of 2008 left no generation untouched – but hit those in the early stages of their careers the hardest.
The Great Recession split that generation down the middle, between the older millennials who walked into a dismal job market and younger millennials who experienced the recovery period but became risk-averse as they watched the recession unfold around them- laying waste to dreams of financial security and home-ownership.
It’s more than avocado toast
Research shows that those who graduate during a recession could see stagnation in their personal financial growth for up to 15 years. Another report found that nearly a decade later in 2016, those born in the ’80s had 34% less wealth than they likely would have if the financial crisis hadn’t occurred.
But that, as we all know, was just the beginning.
By 2012, student debt nationwide hit $1 trillion.
Under normal circumstances (whatever that might mean) young people would sit out a stalled economy and expand their education, which had always meant increasing their career options.
Not in the 2000s.
Millennial students just increased their debt load.
Colleges hiked tuition prices due to lack of state funding and ever-increasing educational budget cuts. In the 2010s, for example, college tuition more than doubled since the 1980s.
Prior generations started building wealth right as they hit the labor market. In contrast, college-bound millennials spent the first decade of their careers digging out of debt.
In a 2019 Business Insider Intelligence survey (https://www.businessinsider.com/millennials-great-recession-student-debt-affordability-crisis-2020-1) of more than 2,000 millennials, 60% of respondents said they took out a student loan for undergraduate or graduate education — and 43% owed between $10,000 and $49,999 at graduation.
In previous generations, that capital would have gone into starting businesses or buying homes – which would have dramatically helped the entire economy.
But debt grew, pay stagnated and housing prices – well, we all know what housing prices have done in the past ten or so years.
Between 1974 and 2017, adults ages 25 to 34 only saw increased earnings of $29 annually, when adjusted for inflation (https://www.supermoney.com/average-millennial-income/). During the same time period, those ages 45 to 54 saw an income growth of nearly $5,400.
We all know what housing prices did between 1974 and 2017. And again between 2017 and 2022.
And it wasn’t just housing that seemed go up by the day.
Health care, college tuition, groceries and auto prices out-paced any increases in pay that some might have seen.
COVID yet again split a generation – with some doing better than before – and many faring far worse.
Those who could work from home made more, and spent far less time commuting while those who had to physically be present to work often made less and had far more demanding schedules.
In almost every year since 2000, there have been more female that male college graduates.
More women are working and many are making more than their male counterparts.
Costs have grown immensely while incomes have barely changed.
Workers who don’t have a college degree are worse off than in previous generations – but those who did “invest” in education found themselves mired in debt.
If you ignore student debt, which is a $1.5 trillion blind spot, young adults with a college degree are slightly better off than previous generations. Those who don’t have a college education are in a much worse situation than their parents and grandparents.
In summary, the median income of young adults has barely changed in 45 years, but the cost of housing, education, and healthcare have never been higher.
Home ownership rates are lower than in previous generations. Among other things, you can blame student debt, and high prices in coastal cities where the best jobs are found.
Real income has increased moderately for some, but it’s nowhere near enough to keep up with the burden of cost inflation in key areas like home, healthcare, and education.
Add in COVID, increasing interest rates, immeasurable impacts of climate change and armed conflict on a scale we have not seen in decades, and you have a recipe for the one economic characteristic none of us can plan for – uncertainty.
It’s a good thing millennials are as flexible and resourceful as they have been so far.
They are, aren’t they?